Can more employee choice actually lower costs?
Randy Myers, CFO Magazine
February 1, 2008
In Canada, which has various markets, health care is not a commodity to be bought and sold. Rather, it is indirectly funded through taxation and directly used. This provides for greater risk management than the extremely poor comparative USA health care system based on monetary affluence. Mr. Siegel presents a very poor case of costs control that would be detrimental to health care. While it is detrimental which he is correct, I argue that is the strategy of health care provider hospitals to maximize throughput rate, insurance companies to maximize revenues and to minimize claims costs, and drug companies to minimize costly drug quality research due to GAAP expensing (since this then raises profits with smaller expenses than if higher quality was researched) and to maximize drug development for the given level of research quality due to GAAP capitalization (since this also raises profits since expenses are deferred).
Posted by David Newman | March 26, 2008 10:16 am
This is a fine update of tactics for health plan cost control. Sound business principles can deliver new cost savings. Health care is a business in a market economy. Major parties, insurance and pharmaceutical companies, are in business to sell their goods and services to make as much money as they can. Like any business, they deal with bottom line Profit & Loss Statements. Lowering health care costs is not good business. This is why health plan cost control can only yield minimal results. In "The Business Value of Health" (2006 survey by Integrated Benefits Institute and CFO Research Services) CFOs noticed that health plan cost control has little success on costs, productivity, health or absenteeism. A greater opportunity to significantly lower total illness costs upon profitability is lost work time. Nearly half those CFOs reported businesses being at or above the critical point where lost work time from poor health has meaningful impact on their company's business performance. Truth is, no matter who pays for health care, businesses need healthy people to work. Three fundamental benefits boost the bottom line: 1. Healthy people come to work more often - less absenteeism. 2. Healthy people work better and can focus better - less presenteeism. 3. Healthy people need fewer medical services. Strategic opportunity exists to improve capital deployment. How? Produce health! This new direction advances current practice of illness prevention, health promotion and wellness. We can now produce optimal health and optimal human functioning with lifelong skills to better operate body, mind & personal energy. Physiological truth points to the starting point for successful cost containment, illness prevention and wellness. First eliminate not "manage" the single primary source of illness costs and lost work time.. One area accounts for 75% - 90% of all primary care doctor visits (American Institute of Stress), 50% of absenteeism (European Agency for Safety & Health - study of USA workers) and 50% of increased health care expenditures (Journal of Occupational & Environmental Medicine). A genuine solution can prevent exponential cost increases when symptoms develop unnecessarily into illness, then disease and organ deterioration. The current health care system is not proactive. It reduces illness only after theyıve developed enough to be diagnosed, an expensive treatment delay. High deductibles delay treatment. Many illness costs are repeated repairs of second, third and fourth generation effects of one physiological event: constant adrenergic arousal or adrenal fatigue. CFOs benefit by understanding physiology fact. Adrenal glands co-produce hormones every body system needs, that influence every cell. Diabetes, heart disease, hypertension, weak immunity, colds, cancers, anxiety, depression, headaches & insomnia can all be caused or prevented from healing by overly taxed adrenal glands not providing hormones in right quality, quantity or timing. Forty years of imprecise stress "management" produced no effective methodology. Knowledge has advanced. We can now eliminate not "manage" stress damage to health AND performance. Skills not pills simultaneously produce optimal health, prevent many illness costs and increase productivity. Significant productivity gains result as employees learn to focus their mind free of the distractions of stress for just 12 minutes per day. That 1 hour per week increases productivity 50 hours per year per person. Imagine 30 extra minutes of clear focus daily company-wide. Translating actual physiology into finance terms appreciates human capital. It shifts strategy beyond health plan cost control to producing optimal health. This health innovation gives ROI that maximizes both productivity & health. More at: http://www.globaloptimalhealthgroup.com/images/GOHG_productivity.pdf
Posted by Robert Siegel | February 14, 2008 12:35 am
Your article is well researched and raises the difference between a cost shift(Consumer driven plans don't reduce costs, they shift them) and cost savings. The reality is that quality matters, but unless there is a cultural transformation to healthier lifestyles, nothing will change. You can read a great story which illustrates the true cost drivers called "You have an Ugly Baby". available at: http://www.amazon.com/You-Have-Ugly-Baby-unpleasant/dp/1419681974/ref=sr_1_1?ie=UTF8&s=books&qid=1202736479&sr=1-1
Posted by Daniel Rickard | February 11, 2008 04:42 pm© CFO Publishing Corporation 2009. All rights reserved.